Pick up the one(s) that can be contracted as OTC product. Choose all the correct answers.V Equity ForwardO Currency FuturesInterest Rate SwapCommodity OptionsVFRA A put option has premium of p(0)=$6 and X=$30. The stock price right now is S(0)=$25. Which of the following statement could be wrong?At expiration, the buyer of the put will not make a profit unless the stock's price goes below $30.|At expiration, the writer of the put will always make profits if the price of the stock exceeds $30A protective put based on the stock and the put has a maximum possible loss of -$1When the underlying price at expiration goes to $31, a protective put based on the stock and the put gets breakeven (i.e. no gain or loss)

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Pick up the one(s) that can be contracted as OTC product. Choose all the correct answers. V Equity Forward Currency Futures Interest Rate Swap Commodity Options FRA

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Pick up the one(s) that can be contracted as OTC product. Choose all the correct answers.
V Equity Forward
O Currency Futures
Interest Rate Swap
Commodity Options
VFRA

A put option has premium of p(0)=$6 and X=$30. The stock price right now is S(0)=$25. Which of the following statement could be wrong?
At expiration, the buyer of the put will not make a profit unless the stock's price goes below $30.
|At expiration, the writer of the put will always make profits if the price of the stock exceeds $30
A protective put based on the stock and the put has a maximum possible loss of -$1
When the underlying price at expiration goes to $31, a protective put based on the stock and the put gets breakeven (i.e. no gain or loss)

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